Nvidia and Meta Platforms: Cheaper Alternatives to the S&P 500

Mar 9, 2026, 2:18 AM

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Nvidia (NASDAQ: NVDA) and Meta Platforms (NASDAQ: META) have recently become more affordable than the S&P 500, a development attracting investor attention. Known collectively as the "Magnificent Seven" alongside companies like Alphabet, Apple, and Amazon, both Nvidia and Meta have lost value in 2026, prompting questions about their potential as investment opportunities.

The forward price-to-earnings (P/E) ratio, a key metric for stock valuation, plays a significant role in assessing these companies. Nvidia currently has a forward P/E ratio of 22.1, compared to 23.6 for the S&P 500, indicating that it is relatively cheaper based on expected earnings growth. Meta's forward P/E also positions it slightly below the S&P 500, suggesting it may offer similar value.

Nvidia: A Top AI Infrastructure Play

Investors who believe in Nvidia's ability to sustain earnings growth see it as a prime option within the Magnificent Seven. The company reported a revenue increase of 65% and a diluted earnings per share growth of 59.5% for its fiscal year ending January 25, 2026. Despite its soaring stock price, Nvidia's valuation remains attractive due to rapid earnings growth.

However, Nvidia's reliance on a handful of cloud providers for over half of its data center revenue, which comprises nearly 90% of its sales, raises concerns. A slowdown in spending from key customers could significantly impact Nvidia's growth trajectory. Nevertheless, if Nvidia can manage to grow its earnings by 20% to 30% annually, it could still be considered a bargain at current levels.

Meta: Capitalizing on AI Investments

Meta Platforms represents a compelling choice for investors interested in companies effectively monetizing AI. Unlike other major tech players that are heavily investing in data center infrastructure, Meta has leveraged AI to enhance its suite of applications, including Instagram, Facebook, Messenger, and WhatsApp. This strategic use of AI allows Meta to connect users with relevant content and advertisements, driving profitability and cash flow.

Meta is also heavily investing in its Reality Labs division, focusing on augmented and virtual reality projects that are powered by AI. This positions Meta as one of the frontrunners in the AI space, potentially leading to substantial future growth.

One of Meta's key advantages is its profitability, which enables it to invest aggressively in AI initiatives without jeopardizing its financial stability. This "AI snowball" effect could accelerate growth in high-margin segments, allowing Meta to take on projects that may take years to yield returns.

Investment Considerations

Both Nvidia and Meta Platforms present strong cases for consideration as potential buys. While Nvidia is seen as a top choice for those confident in its long-term growth trajectory, Meta's ability to monetize AI effectively makes it a strong contender as well. As both stocks become cheaper, they may offer reduced risk for long-term investors, making them appealing options in March 2026.

Investors are encouraged to weigh their options carefully, considering each company's unique strengths and market positions before making investment decisions. The current market environment may provide an opportunity for savvy investors to capitalize on the potential rebounds of these technology giants.

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